Home > Uncategorized > 2012/02/17: Quick Post: The Agony and Ecstaquities

2012/02/17: Quick Post: The Agony and Ecstaquities

© 2012 ROHR International, Inc. All International rights reserved.

There seems good reason for ecstatic extension of the Ecstaquities rally. Bears may still feel that headwinds into the middle of this year will be more than enough to reverse the current up trend. Yet the price activity of the past several days has been underpinned by what is now a full week of better than expected economic data.

The ‘Agony’ was Wednesday’s sharp equities selloff from new highs for the current rally, which seemed to reinforce some “tired” trend indications. The inability of the March S&P 500 future to push through critical 1,350-55 resistance in the wake of such strong economic news and central bank largesse seemed an important ‘macro-technical’ failure.

However, at the end of the day the potentially ‘toppy’ price activity in equities that even saw daily MACD’s mildly DOWN only left us with the classical consideration: “indicators are indicators” and always still require price movement confirmation. And in this case it was clear March S&P 500 future needed to post a daily Close back below the gap above the 1,329.50 previous high in the wake of the US Employment report. Too bad for the bears that yesterday’s strong Australian Employment indications along with constructive US data just did not allow for any further pressure on the equities.

And that has continued this morning on the better-than-expected UK Retail Sales and Euro-zone Construction Output; from two of the key economies that are allegedly headed into recession! Not much for the bears to lean against.

So now what?

 

While the final arbiter of successful follow-through for the March S&P 500 future would be to push above last May’s 1,367 lead contract high, that will start to look like more of a foregone conclusion if it manages to post a weekly Close above the hefty 1,350-55 congestion area. And just look at what’s going on today, another wonderful attempt to spin traders’ minds at a critical technical level… and this time it’s into the US Presidents’ Day weekend Monday holiday while the rest of the world is open. Lovely.

With all US exchanges ‘regular trading hours’ transactions closed on Monday (and it includes the CME Globex electronic trading as well), nothing will be convincingly confirmed until the market activity elsewhere in the world on Monday remains consistent with current signals and trend momentum. That goes both for the equities in their own right, and the influence they exert on other asset classes now that the traditional intermarket relationships have been significantly reestablished (i.e. counterpoint out of equities back into govvies and the US dollar.)

Under the circumstances the old cliché, “Discretion is the better part of valor” likely applies to taking any positions home this weekend in spite of clear improvement in the economic data of late. Or, stated in the vernacular it’s probably time to, Drop back five and punt.” Which is just what we are doing… shutting it down until we see today’s Close, and taking Monday off to allow Europe to work its magic (such as that may be.)

We look forward to being back on track on Tuesday.

Have a great holiday weekend and…

Thanks for your interest.

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